High-throughput, rapid and homogeneous mixing of microdroplets in a small length scale such as that in a microchannel is of great importance for lab-on-a-chip applications. Various techniques for mixing enhancement in microfluidics have been extensively reported in the literature. One of these techniques is the mixing enhancement with magnetofluidics using ferrofluid, a liquid with dispersed magnetic nanoparticles. However, a systematic study exploring the mixing process of ferrofluid and its influencing parameters is lacking. This study numerically examines the effect of key parameters including magnetic field, mean velocity, and size of a microdroplet on the mixing process. A microfluidic double T-junction with droplets in merging regime is considered. One of the dispersed phases is a ferrofluid containing paramagnetic nanoparticles, while the other carried neutral species. Under an applied magnetic field, the ferrofluid experiences a magnetic force that in turn induces a secondary bulk flow called magnetoconvection. The combination of the induced magnetoconvection and shear-driven circulating flow within a moving droplet improves the mixing efficiency remarkably. Mixing enhancement is maximized for a specific ratio between the magnetic force and the shear force. The dominance of either force would deteriorate the mixing performance. On the other hand, using a magnetic force and a shear force with comparable order of magnitude leads to an effective manipulation of vortices inside the droplet and subsequently causes an optimized particle distribution over the entire droplet. Furthermore, the smaller the droplets, the better the mixing.